China Securities Journal cited Mr Jiang Feitao from Chinese Academy of Social Sciences as saying that China's steelmaking capacity utilization rate may fall to 71.64% in 2009 a record low since 2001.

Mr Jiang said the utilization rate posted at 75.83% last year, versus around 80% during 2001 to 2007 and the rate had once surged to 92.35% in 2002.

However, compared with the extensive global output cut China's crude steel production level remains high and stood at 127 million tonnes in the Q1 up by 1.19%YoY from a year ago. While global production in the period off massively by 22.92%; of which, EU, North America and Japan eyed over 42% output falls.

The high output was mainly contributed by the reviving construction steel production like rebar, wire rod and medium and small sized sections; while the recovery of flat products steel under oversupply pressure.

In the Q1 rebar output grew 20.96%YoY from a year ago wire rod up 8.21% and medium and small-gauged sections advanced by 21.37%. Flat products output in the quarter posted at 50.69 million tonnes down by 7.68% from the previous year; narrow strip, 10.09 million tonnes off 2.33%.

And the centralized capacity utilization of the product this year is certain to exert great pressure on its recovery.